Trade Costs Declining After Sanctions Relief

The achievements of Iran's nuclear deal must not be undermined, as the cost of foreign trade for the country is declining among other things, the governor of the Central Bank of Iran said.

"Under the sanctions, the costs of doing trade [with other countries] had risen by at least 15%, which will reduce with the new openings," Valiollah Seif was also quoted as saying by the official news website of CBI. 

Seif added that the country's oil exports doubled in the wake of sanctions relief.

Iran’s crude production has returned to levels last seen before sanctions were imposed over its nuclear program, as the nation raised output to regain market share, the International Energy Agency said. 

Output reached 3.56 million barrels a day in April 2016, the highest since November 2011, and exports soared to 2 million barrels a day, just shy of the level before the trade restrictions. China was the biggest buyer of Iranian crude last month, taking more than 800,000 barrels a day. 

The nuclear accord, formally called the Joint Comprehensive Plan of Action, was reached by Iran, six world powers and European Union in July 2015, which was implemented on January 16, 2016.

Before JCPOA, Seif said Iran's correspondent banking relations were at a standstill, "but now correspondent relations with international banks are at a good level".

The official noted that as a result of the restrictions, money transactions had to be redirected toward the bureaux de change network, stressing that current circumstances have made it possible to return to the banking system that entails lower costs and risks.

"Although we witnessed a lack of commitment from the US with regard to JCPOA," he added, "the deal's achievements must not be ignored and underplayed."

Boon for Markets 

The CBI governor also considered the market stability as a direct result of the positive economic endeavors of the government, saying conditions are suitable for long-term decision-making by businesses, "which is what our economy needs".

The plan to support the ailing small- and medium-sized enterprises was once again mentioned by the central banker who said 21,000 units have so far received 150 trillion rials ($3.911 billion) from the country's lenders.

According to Seif, the financing of SMEs has "created momentum in industrial parks".

As previously announced by Seif and other officials, 160 trillion rials ($4.172 billion) have been earmarked by the end of the current fiscal year in March as part of the plan to support SMEs.

On the unification of foreign exchange rates, the official said the required conditions "will be established in the next few months and the central bank will take the necessary measures".

Seif had repeatedly promised from the beginning of the current year that the official and unofficial foreign currency rates in the Iranian market will be unified by the yearend, which seems unlikely at present. 

Iran operates two exchange rates for the US dollar—a free market rate that was around 38,350 rials on Wednesday and an official rate used for some state transactions, set by the central bank at around 32,379 rials. 

In recent months, the central bank has raised the official rate gradually to shrink the gap between the two. It said it wants to unify the exchange rate to make the economy more efficient and create a level playing field for private firms competing with state institutions with access to cheaper foreign exchange.